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GSK adds to the fold

UK pharma giant acquires monoclonal antibody specialist Domantis and enters into collaboration with EPIX

GlaxoSmithKline (GSK) has agreed to acquire biotech firm Domantis for £230m in cash, fuelling the trend for large pharma companies to swallow smaller, innovative firms at the cutting-edge of medicines research.

Domantis is a monoclonal antibody specialist and has pioneered the next generation of antibody therapy, which is based on the smallest functional binding units of human antibodies. These units, referred to as domain antibodies (dAbs), can be administered through inhaled, topical and potentially also oral formulations, as well as by injection and infusion.

The biotech firm is currently carrying out research programmes that address rheumatoid arthritis, asthma, chronic obstructive pulmonary disease and multiple myeloma.

Ian Tomlinson and Sir Gregory Winter, who will share a payout of £15m when the deal is completed in January 2007, established the company in 2000. Tomlinson will continue to run the company under the new management, but Bob Connelly, chief executive of Domantis, is leaving the firm.

The deal marks an exit for private equity group, 3i, which first invested in Domantis in 2004 when the firm raised £17.5m. A year later, 3i led another round of financing at the company. The private equity firm is rumoured to be getting £29.5m from the sale. Other investors in Domantis include biotech investment fund, MVM and MC Life Science Ventures.

Under the deal, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvement Act, Domantis will become part of GSK's Biopharmaceuticals Center of Excellence for Drug Discovery (CEDD) and continue to operate from its research site in Cambridge.

Further additions
GSK has also added to activities within its CEDD through the announcement of a deal with EPIX Pharmaceuticals. The two companies have revealed a global multi-target collaboration to discover, develop and market novel drugs targeting four G-protein coupled receptors (GPCRs) for the treatment of diseases, including EPIX' novel 5-HTA partial agonist candidate, PRX-03140, which is in early clinical development for the treatment of Alzheimer's disease.

EPIX will receive total initial payments of £17.81m ($35m), including £8.91m ($17.5m) through the purchase of approximately 3.01m shares of common stock. The firm could also potentially earn up to £610.7m ($1.2bn) if it reaches certain discovery, development, regulatory and commercial milestones across the four GPCR programmes. In addition, EPIX will also receive tiered double-digit royalties on sales achieved by GSK of all collaboration-developed products.

Under the deal, EPIX will be responsible for the discovery and development of small molecule drug candidates targeting the four GPCRs, at which point GSK will have the option to license each product for further development and commercialisation. If GSK decides to license EPIX' 5-HTA partial agonist programme, EPIX will retain the right to co-promote products from the initiative in the US.

30th September 2008

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